Insured Contract and Primary Coverage

October 28, 2013

Our insured is a subcontractor who leased his backhoe, a listed vehicle on the BAP policy with symbols 7, 8, and 9 for liability, to the General Contractor. The backhoe was driven by an employee of the GC and hit a parked vehicle. The GC and our insured have a contract that they believe would have the GC assume liability. Would such a contract shift primary PD coverage to the GC since it was his driver, or would our insured still be primary since the backhoe was his vehicle?

Illinois Subscriber

Normally, coverage for an owned vehicle is primary. However, the other insurance clause in the standard BAP states that liability assumed under an insured contract is primary. So, you need to check if the GC's auto policy applies under an insured contract in this instance; if so, his auto policy will become primary. If the GC does not have an applicable auto policy, then your insured's policy will be primary.

You did not mention any CGL form that might apply, but since a backhoe could be considered mobile equipment by definition and the GC probably has a CGL form, you need to review that policy also for possible coverage. An insured contract under the terms of the CGL form would mean that the GC has assumed the tort liability of your insured and so, the CGL form of the GC would apply primarily. Of course, this relies on the backhoe being considered mobile equipment; if it is considered an auto, the auto exclusion on the CGL form would prevent coverage.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis